Affiliation Bias in Arbitration: An Experimental Approach

Abstract

AbstractA characteristic feature of arbitration, a growing form of legal adjudication, is that each disputing party appoints an arbitrator. Commentators, however, suggest that party-appointed arbitrators tend to be biased in favor of their appointers. Evaluating this claim from data on historical disputes is problematic because of nonrandom selection of arbitrators. Here we use a novel experimental approach to estimate the causal effect of the appointing party. Using survey experiments with arbitration experts around the world, we show that professional arbitrators suffer from affiliation effects—a cognitive predisposition to favor the appointing party. At a methodological level, we offer a solution to the problem of measuring this effect when credible observational designs are lacking.